Partnerships for Computer Reseller Businesses Explained

​A partnership in a computer reseller business is a business with more than one owner, when it is not a corporation or an LLC (limited liability company).

A partnership is also a simple and inexpensive business structure to form and maintain.

There are two types of partnerships: general partnerships and limited partnerships.

Partners in business are liable for all business debts of the computer reseller business. Therefore if the business itself can not pay a creditor, supplier, landlord, service provider, or lender, then the creditor can legally go after any of the partners’ property, car and other material possessions.

​However, a partner can also have limited personal liability if the partnership is formed as a limited partnership. ​

In this case, only the general partner who runs the business has personal liability. The limited partners are only at risk at losing their stake in the partnership as investors.

​Computer reseller businesses who are concerned about personal liability often choose to incorporate their business or operate as a limited liability company (LLC).

A partner can also bind the business, or the company to a contractual agreement or a legally binding business deal. There may be some limitations however.

For example, a partner can not bind the business partnership to a sale of all that pertains to the partnership without a legal agreement. And if a partnership is not carefully handled, then any partner can bind others to a business deal and hold all partners responsible.

In a worse case scenario, an individual partner can be sued for the full amount of any business debt. In this case, the same individual partner can sue the other partners for their share of the debt as well. Because of these types of scenarios, trust becomes a major asset in forming the business partnership.​

​Filing taxes in a partnership:

When it comes to filing taxes, a partnership is not taxed separately from its owners. The income goes straight to the partners. This is what the IRS refers to as a pass-through entity. In this case, the partnership does not pay any income taxes on the profits earned. This income simply passes through the business directly to the partners who in turn report their earnings of the profits on their own individual tax returns. Furthermore, each partner must pay estimated quarterly payments each year to the IRS.

The partnership must file IRS Form 1065 each year, even though the partnership itself does not pay taxes. This form clearly shows what each partner has earned which is then turned into the IRS for review and approval.

In general, just by agreeing to go into a partnership with another individual will get you started. And filing forms is not required to form and establish an ordinary partnership. However, partnerships must meet local and state requirements just as any new business.

Most counties require businesses to pay a minimum tax when registering your business. Then you may also have to obtain an EIN (employer identification number). Furthermore, when it comes to buying and selling products, you will also have to obtain a sales tax license from your state, (if applicable). A zoning permit from your local county clerks’ office may also be required as well.​

If the business name does not contain the last names of all the partners involved then your partnership will have to register a fictitious business name with your county clerks’ office.

It is always best to include details of each partners rights, duties, and share of the net profits into a legally binding, written agreement. And although such is not required legally it makes good business sense to do.

If one partner leaves the company then the partnership itself dissolves. The remaining partners are obligated to fulfill business debts and responsibilities while dividing assets and profits amongst the remaining partners. In such a case, in order for business to continue as usual, a partnership agreement should include a buyout agreement which clearly states what will happen to business assets and profits if one of the partners decides to leave or sell.

Partnerships can work for a computer reseller business when the right foundation is laid in the beginning, and the partnership is built on trust.​